Spotify files for confidential IPO

Music-streaming company Spotify has confidentially filed for a public listing that lets companies list shares without raising money through a traditional stock offering.

According to news outlet Axios, which first broke the news, the company is most probably seeking a listing in Q1 of 2018, as the papers revealed it filed for IPO in late December.

According to Bloomberg, with steady cash from more than 60 million paying subscribers, the world’s largest paid music-streaming service doesn’t need more funding.

Instead of an initial public offering, it’s trying a direct listing, which essentially lets private stakeholders start trading their shares on a public exchange. That avoids underwriting fees and restrictions on stock sales by current owners, and doesn’t dilute the holdings of executives and investors.

Spotify, which has been valued at about $15 billion, would be the most prominent company by far to attempt a direct listing, a method that until now has been used by small issuers and real estate investment trusts. It would also be a first for the New York Stock Exchange, which has sought permission from the Securities & Exchange Commission to change its rules for the occasion.

Despite confidentially filing for an initial public offering, the music-streaming service is facing some legal troubles that could block its efforts to launch an IPO.

Spotify is being sued by Wixen Music Publishing, claiming the company has been using thousands of songs from artists it represents, without a license. The lawsuit is claiming damages of US$1.6 billion.